Charitable companies in NI must get permission to loan money to directors, new guidance says

The Charity Commission for Northern Ireland lists the circumstances under which its consent must be sought regarding changes to a company's articles of association

Charity Commission for Northern Ireland
Charity Commission for Northern Ireland

Charitable companies in Northern Ireland that want to loan money to one of their directors must first obtain permission from the Charity Commission for Northern Ireland, new guidance says.

The commission has published new guidance, Consents for Charitable Companies, that explains when a change to a charitable company’s articles of association must be approved by the regulator.

The articles of association define the purpose of the organisation and explain how certain processes, such as appointing directors, should be carried out.

According to a statement from the commission, the guidance says there are three circumstances in which the commission’s consent must be obtained before changes can be made to the articles of association.

These include any change to a charity’s objects and any change that will affect what would happen to the charity's property if the charity were to be wound up.

The third change that requires consent from the commission is one that would "allow charity funds or property to be used to benefit the directors or members, or people or organisations connected with them", the regulator’s statement said.

According to the guidance, this includes loans or quasi-loans to the directors, credit transactions that would benefit directors and payments made to directors who lose their positions.

In all other cases, charities are free to make changes to their articles of association without consent from the commission, unless the articles say that the regulator’s consent is required.

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